Charter of the Audit Committee of the Board of Directors

As Amended September 23, 2010

PURPOSE

The Audit Committee (the “Committee”) is appointed by the Board of Directors (the “Board”) of SMF Energy Corporation (the “Company”). This charter specifies the scope of authority and responsibility of the Committee. The primary function of the Committee is to assist the Board in fulfilling its oversight responsibilities, primarily through:

• overseeing management’s conduct of the Company’s financial reporting process and systems of internal accounting and financial controls;
• monitoring the independence and performance of the Company’s outside auditors; and
• providing an avenue of communication among the outside auditors, management and the Board.

COMPOSITION

1. The Committee shall have at least three (3) members at all times, each of whom must be independent of management, as well the Company and each of its affiliates. A member of the Committee shall be considered independent if
   1. he or she is not an officer, director or employee of the Company;
   2. he or she does not receive, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or its affiliates other than in connection with serving on the Committee or as a member of the Board, except to the extent permitted by the rules of the Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market (“Nasdaq”);
   3. he or she was not, at anytime during the past three years, a partner or employee of the Company’s current or former outside auditor who worked on the Company’s audit during such three year period;
   4. he or she is not an “affiliated person” as defined by rules of the SEC and Nasdaq;
   5. he or she meets all other requirements for independence imposed by law, including but not limited to SEC and Nasdaq rules.
2. All members of the Committee shall have a practical knowledge of finance and accounting and be able to read and understand fundamental financial statements at the time of their respective appointments to the Committee. In addition, members may be required to participate in continuing education if required by SEC or Nasdaq rules.
3. At least one member of the Committee shall be a “financial expert” as defined by SEC and Nasdaq rules.
4. Each member of the Committee shall be appointed by the Board and shall serve until the earlier to occur of the date on which he or she shall be replaced by the Board, resigns from the Committee, or resigns from the Board.

MEETINGS

1. The Committee shall meet as frequently as circumstances dictate, but no less than four times annually. The Board of Directors shall appoint a chairperson of Committee. A majority of the members of the Committee shall constitute a quorum. The Committee shall maintain minutes or other records of meetings and activities of the Committee. Quarterly meetings shall include separate executive sessions with the outside auditor and with management.
2. The Committee shall, through its chairperson, report regularly to the Board following the meetings of the Committee concerning the activities and proceedings of the Committee. In this connection, the Committee may report to the Board concerning the quality of the Company’s financial statements, the performance and independence of the Company’s outside auditors, or any of the other matters described in this charter as within the Committee’s Responsibilities and Duties. For those matters in which the Committee has direct responsibility independent of the Board, such as the selection of auditors and the fees to be paid by the Company for audit and non-audit services, the Committee shall inform the Board of the actions taken by the Committee. For those matters in which the Committee has only indirect or advisory responsibility, the Committee shall make such recommendations to the Board for Board action as it deems appropriate under the circumstances.

RESPONSIBILITIES AND DUTIES

The Committee’s principal responsibility is one of oversight. The Company’s management is responsible for preparing the Company’s financial statements and the outside auditors are responsible for auditing and/or reviewing those financial statements. In carrying out these oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the outside auditors’ work.
The Committee’s specific responsibilities are as follows:

General

1. The Committee shall have the power to conduct or authorize investigations into any matters within the Committee’s scope of responsibilities. The Company shall have unrestricted access to members of management and other employees of the Company, as well as all information relevant to the carrying out of its responsibilities.
2. The Committee shall, with the assistance of management, the outside auditors and legal counsel, as the Committee deems appropriate, review and evaluate, at least annually, this charter. The Committee shall then report and make recommendations to the Board with respect to the changes, if any, which it believes are necessary or appropriate.
3. The current charter will be included in the proxy statement for the Company’s annual meetings of shareholders at least once every three years or as often as may otherwise be prescribed by SEC or Nasdaq rules.
4. The Committee shall prepare annual reports of the Committee for inclusion in the proxy statements for the Company’s annual meetings as required by SEC and Nasdaq rules.
5. The Committee shall, in addition to the performance of the duties described in this charter, undertake such additional responsibilities as from time to time may be:
   1. delegated to it by the Board;
   2. required by law, including but not limited to federal securities laws and SEC or Nasdaq rules; or
   3. deemed to be reasonably necessary, in the Committee’s discretion, in order to carry out the duties prescribed by this charter.
6. The Committee is empowered to retain, at the Company’s expense, independent counsel, accountants or others for such purposes as the Committee, in its sole discretion, determines to be appropriate to carry out its responsibilities.

Internal Controls and Risk Assessment

1. If and to the extent deemed appropriate by the Committee, it shall review, from time to time, with management and the outside auditors:
   1. the effectiveness of or weaknesses in the Company’s internal controls, including computerized information system controls and security, the overall control environment and accounting and financial controls; and
   2. whether there is a need to institute an internal audit function at the Company.
2. The Committee shall obtain from the outside auditors their recommendations regarding internal controls and other matters relating to the accounting procedures and the books and records of the Company and its subsidiaries and review the correction of controls deemed to be deficient.
3. If the Company institutes an internal audit function, the Committee shall review the appointment, performance and replacement of the senior internal auditing executive, and the activities, organizational structure and qualifications of the persons responsible for the internal audit function.
4. The Committee shall establish procedures for:
   1. the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters; and
   2. the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
5. The Committee shall review major financial risk exposures and the guidelines and policies which management has put in place to govern the process of monitoring, controlling and reporting such exposures.

Outside Auditors; Their Performance and Independence

1. The outside auditors are ultimately accountable to the Board and the Committee, as the representatives of the shareholders of the Company, but shall report to the Committee. The Committee shall be directly responsible for the engagement and termination (subject, if applicable, to shareholder ratification), compensation and oversight of the work of any independent auditor engaged by the Company for the purpose of preparing or issuing an audit report or related work. The Committee shall select any such outside auditors, which selection the Board may, in its discretion, submit to the shareholders for their approval by a proxy statement.
2. The Committee shall:
   1. confer with the outside auditors concerning the scope of their examinations of the books and records of the Company and its subsidiaries;
   2. review the scope, plan and procedures to be used on the annual audit, as recommended by the outside auditors;
   3. review the results of the annual audits and interim financial reviews performed by the outside auditors, including:
      1. the outside auditors’ audit of the Company’s annual financial statements, accompanying footnotes and its report thereon;
      2. any significant changes required in the outside auditors’ audit plans or scope;
      3. any material differences or disputes with management encountered during the course of the audit (the Committee to be responsible for overseeing the resolution of such differences and disputes);
      4. any material management letter comments and management’s responses to recommendations made by the outside auditors in connection with the audit;
      5. matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communications with Audit Committees), relating to the conduct of the audit;
   4. authorize the outside auditors to perform such supplemental reviews or audits as the Committee may deem desirable;
   5. obtain from the outside auditors assurance that they have complied with Section 10A, as amended, of the Securities Exchange Act of 1934.
3. The Committee shall inquire into any accounting adjustments that were noted or proposed by the outside auditors but were “passed” as immaterial or otherwise.
4. The Committee shall inquire as to any matters that were referred to the outside auditors’ national office relating to accounting policies and/or financial statement disclosure within the Company’s financial statements and, to the extent deemed appropriate, request an opportunity to address such issues directly with a representative of such national office.
5. The Committee shall, at least annually, obtain and review a report by the independent auditors’ describing:
   1. the outside auditors’ internal quality control procedures;
   2. any material issues raised by the most recent internal quality-control review or peer review of the outside auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the outside auditors, and any steps taken to deal with any such issues.
6. Pre-approval by the Committee shall be required with respect to the fees for all audit and other services performed by the outside auditors as negotiated by management.
7. If and to the extent that non-audit services are proposed to be rendered to the Company by the outside auditors and those non-audit services are permissible under law, including SEC and Nasdaq rules, the approval of the Committee must be obtained in advance of any engagement of the outside auditors to render such services. The Committee shall not approve the engagement of the outside auditors to render non-audit services prohibited by law or rules and regulations promulgated by the SEC. The Committee shall consider whether the provision of non-audit services is compatible with maintaining the outside auditors’ independence, including, but not limited to, the nature and scope of the specific non-audit services to be performed and whether the audit process would require the outside auditors to review any advice rendered by the outside auditors in connection with the provision of non-audit services. The Committee may delegate pre-approval authority to a member of the Committee or a subcommittee of the Committee. In such case, the member or subcommittee to whom such authority is delegated shall report any such approvals to the Committee at or prior to its next meeting.
8. The Committee shall receive from the outside auditors on a periodic basis a formal written statement delineating all relationships between the outside auditors and the Company, consistent with the Independence Standards Board, Standard No. 1, regarding relationships and services, which may impact the objectivity and independence of the outside auditors, and other applicable standards. The statement shall include a description of all services provided by the outside auditors and the related fees. The Committee shall actively engage in a dialogue with the outside auditors regarding any disclosed relationships or services that may impact the objectivity and independence of the outside auditors and shall evaluate, after gathering information from management, and other Board members, the performance of the outside auditors and shall take any action which it deems necessary and appropriate to satisfy itself of the independence of the outside auditors. The Committee may establish policies for the hiring of current or former employees or partners of the outside auditors.
9. The Committee shall require a rotation of the outside auditors’ lead audit partner no less than every five years.

Financial Reporting

1. The Committee shall review and discuss with the outside auditors and management the Company’s audited annual financial statements that are to be included in the Company’s annual report on Form 10-K and the outside auditors’ opinion with respect to such financial statements, including reviewing the nature and extent of any significant changes in accounting principles or the application of such accounting principles; and determine whether to recommend to the Board that the financial statements be included in the Company’s annual report on Form 10-K for filing with the SEC.
2. The Committee shall review and discuss with the outside auditors and management, and require the outside auditors to review, the Company’s interim financial statements to be included in the Company’s quarterly reports on Form 10-Q prior to filing such reports with the SEC.
3. The Committee shall review and discuss:
   1. the existence of significant estimates and judgments underlying the financial statements, including the rationale behind those estimates, as well as material accruals and reserves, as such estimates, judgments, accruals and reserves relate to the Company’s accounting principles;
   2. all critical accounting policies identified to the Committee by the outside auditors;
   3. major changes to the Company’s accounting principles and practices, including those required by professional or regulatory pronouncements and actions, as brought to its attention by management or the outside auditors; and
   4. material questions of choice with respect to the appropriate accounting principles and practices to be used in the preparation of the Company’s financial statements, as brought to its attention by management and/or the outside auditors.
4. The Committee shall review and discuss the Company’s disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in any annual or quarterly report, or other report or filing filed with the SEC.
5. The Committee shall review all earnings press releases of the Company that have been published by the Company, as well as financial information and earnings guidance, if any, that has been provided by the Company to analysts and rating agencies.
6. The Committee shall discuss with the outside auditors any item not reported as a contingent liability or loss in the Company’s financial statements as a result of a determination that such item does not satisfy a materiality threshold. The Committee shall review with the outside auditors the quantitative and qualitative analysis applied in connection with such assessment of materiality, including, without limitation, the consistency of such assessment with the requirements of SEC Staff Accounting Bulletin No. 99.
7. The Committee shall review and consider other matters in relation to the financial affairs of the Company and its accounts, and in relation to any audit of the Company as the Committee may, in its discretion, determine to be advisable.
8. The Committee shall meet at least annually with management, the outside auditors and the inside auditors, if any, in separate executive sessions to discuss any matters that the Committee or such groups believes should be discussed privately.

Compliance with Laws, Regulations and Policies

1. The Committee shall review with management actions taken to ensure compliance with any code of ethics or conduct for the Company established by the Board. The Committee shall review conduct of executive officers and directors alleged to be in violation or potential violation of such code and, in appropriate instances, grant a waiver of the relevant provisions of the code for specific individuals. The Committee may direct the Company to take remedial, disciplinary or other measures against executive officers and directors who have violated the code and to promptly make appropriate public disclosure of any waiver of, or change in, the code applicable to executive officers or directors.
2. The Committee shall review with the Company’s legal counsel any legal compliance matters that could have a significant, adverse impact on the Company’s financial statements.
3. The Committee shall periodically review the rules promulgated by the SEC and Nasdaq relating to the qualifications, activities, responsibilities and duties of audit committees and shall take, or recommend that the Board take, appropriate action to comply with such rules.